Mastering Supplier Relations Through Strategic Dialogue with Kelly Barner

00:00 - Kelly (Guest)
A very value-oriented, commercially-minded procurement professional. Even if they can't have that conversation in the moment is going to go red flag. Note for later. Find the appropriate time to have this conversation in the right context. So it's not cheating, it's not giving undue opportunity to one provider, but you should want to know what that information is.

00:21 - Mike (Host)
My name's Mike Lander and you're listening to Higgle, the B2B Sales Club podcast, where we bring you actionable insights about sales, RFPs, negotiations and difficult procurement discussions from sales leaders, brand leaders and procurement leaders. Please subscribe to get updates when new episodes are released. Kelly, thanks ever so much for joining me on hey Girl, the B2B Sales Club podcast.

00:49 - Kelly (Guest)
I am very glad to be here, Mike. Thank you so much for inviting me.

00:52 - Mike (Host)
It's a pleasure and for the audience listening. I get a lot of people saying about procurement and about you know they're the devil incarnate and all they care about is price. And you know it's always a beat up session and I try and avoid them. Well, you should definitely, definitely stay tuned to this episode because Kelly's got some amazing perspectives on procurement the more evolved procurement people and the less evolved procurement people. So, without further ado, kelly, who are you, what do you do and something unusual about yourself.

01:26 - Kelly (Guest)
Sure, so my name is Kelly Barner. I am co-founder and head of content and operations at a company called Art of Procurement. We're the number one procurement podcast in the world, so always glad to do podcast to podcast connections on a daily basis. I create content, I put out fires, I have interesting conversations, so I'm incredibly lucky. Something about me that people would not necessarily know I can't bake Like not even to save my life, and it's so bad.

01:51
I have three kids 17, 15, and 12. You know it's bad when your kids are saying it's okay, mommy, we'll just buy cookies at the store. So I literally can't bake. I can cook. You can cook In my mind, slightly different. I'm actually a pretty good cook, yep, but baking something about brownies and cookies just escapes me. I can't do it, and so a few years ago, I officially retired my baking pans. They've now all been put to use underneath Lego projects, just for the good of the world. Very good. But yes, no, I can't bake. So if I ever offer to bake something for you, say no, thank you. Why don't you just bring the wine?

02:32 - Mike (Host)
We'll all be better off for it. Bring the wine and I'll buy some cookies. Exactly, exactly. So Kelly let's get into the first topic. So first of all, why do procurement behave the way they do and what motivates them?

02:46 - Kelly (Guest)
So you know, it's really interesting because you ask the question in current tense, right, why does procurement behave the way they do today? What motivates them today? Right, but like all corporate functions, we've been on a journey and it's been quite an evolution. And the interesting thing is, even though we go back to you know, in the US I referenced sort of the railroads going back to the early 19th century it's been around for a long time as a corporate need, as a business process, but as a formal profession. It's really been like the last 20 years or so that things have started to substantially change. So we've literally out of being purchasers straight negotiating, price-driven.

03:28 - Mike (Host)
So first of all, kelly, this is a great topic. I hadn't thought about this. If you go back in time, even the thing that they were called. So we've had purchasing, procurement and sourcing professionals. I've never heard any agency or tech firm ever talk about I meet these sourcing professionals. I've never heard any agency or tech firm ever talk about I meet these sourcing professionals. And yet I was a sourcing professional. I wasn't a procurement person per se, I was a sourcing professional. But when I say to people I was a sourcing professional, they're like, uh and I go procurement and they're like, ah, procurement, yes.

04:01 - Kelly (Guest)
And it's interesting too, because that actually to a procurement person, just so you know, mike that signals something about the size of your organization, Right, if you have people that identify as sourcing versus procurement, it means the team is large enough to have segmented sourcing, which is typically the more strategic, relational kind of work, from the procurement, which is literally just a longer word for purchasing.

04:25 - Mike (Host)
Exactly yes, and often used to be so. It's great to get your view on this procurement slash. Purchasing, often, as a procurement sourcing professional, would be deemed as being the more tactical end of the spectrum. Yes, yeah, absolutely. Contracts doing deals, getting POs signed, doing three-way matching, all that kind of stuff.

04:50 - Kelly (Guest)
Yes, and yet sourcing can be transactional too. Yeah, it can. I mean all of those nice consulting-y created five, six, seven step process flows. If you follow it like a checklist, I don't care what your title is you're being transactional right. If you're not being strategic and thoughtful and opportunistic and working with suppliers I know that's something that we're going to get into today from a sales and service provider standpoint, but really any role if you're not coming to it with the right motivation. So, sort of going back to your initial question you are probably going to slide into the trap of being transactional and truthfully, trust me, procurement does not want to be tactical or transactional. I genuinely mean it, please. I know you're all just meeting me. We do want to be strategic collaborators, partners to the business, partners to our providers, and we've worked very hard to change things to get to this point.

05:46 - Mike (Host)
So what has changed? So if you look at the evolution, the history from interesting like the 19th century, as you say, the industrial revolution, railroads through to today. Why has that business need and that function had to change?

06:03 - Kelly (Guest)
It's almost like we started getting better at being centralized. And I'll use air quotes, which I know is a very bad practice for podcasts, but air quotes, strategic, yep. And we got so good at it we started to drive unintended consequences. So, for instance, the very earliest sourcing projects were typically based on leveraging volume. So you'd say, okay, I've got 15 suppliers providing this based on leverage volume, I really only need three or four. And so we kind of pushed it down to three or four, got much better pricing, but you're still only signing a three to five year contract for that volume. Over time, through supplier rationalization, we shrunk the supply base considerably, which one or two cycles down the road, when those contracts had to be renegotiated, we either found out that we had unintentionally embedded higher levels of risk in our supply base, our supply chain, or we had completely wiped out all of our leverage, because naturally most of that volume went to the larger providers which, as we consolidated, our spend with them and there was a collective procurement.

07:11
oh crap, what have we done Exactly? And we had to sort of stop and rethink.

07:17 - Mike (Host)
And how do we unwind that exactly?

07:20 - Kelly (Guest)
Exactly One contract cycle at a time. And so that's where procurement sort of got to the point where it couldn't just be about risk or cost or how many suppliers or the administrative burden associated with managing them. It had to be all of those things at the exact same time, more looking at trade-offs than necessarily trying to address one objective at a time.

07:43 - Mike (Host)
So what motivates them, kelly? What motivates a sourcing professional or strategic procurement professional? When a supplier meets them, we'll talk about when and how and why, but when they meet them, what motivates those buyers, those professional buyers?

08:02 - Kelly (Guest)
Now I think everyone in your audience is currently yelling at whatever device they're listening to or watching this on Savings and I would just like to say not true, fake news.

08:14
We need to debunk that In too many cases, procurement is still being measured from a straight KPI performance metric standpoint on savings. But that is not quite the same as what motivates us. What motivates most procurement and sourcing professionals today is being respected by the leadership level of the company that they work for. And we know that savings are important. We know that either spend under management or spend under oversight is important, but it doesn't earn you respect, it doesn't get you regard and it sure as heck doesn't give you any influence in internal discussions and decision making. So, yes, we're still savings and spend and all of those things, but what really motivates us is an opportunity to go back to a budget owner, a CFO, and say yes, yes, here are the numbers, but guess what else? And it's how that second sentence ends. That actually motivates us to get creative, to partner, to research, to look at new ways of fulfilling business needs and even changing the internal customer experience.

09:22 - Mike (Host)
So again unscripted, because it's always the best. If I was a, let's say, I'm the sales director of a consultancy company a decent sized one, maybe 200 people and I've met you and you've got a savings agenda and I've managed to draw that out and you've declared that there is an agenda, but obviously not to what level, and we've managed to trade rather than me discount, so that we've got some fair value exchange. We've now got to a point whereby you've got an agenda for your bosses that you can go to them with and say yes, we've declared savings under certain conditions, given some certain trade-offs, however, and your CFO has gone tick. Thanks, kelly, that's what I wanted. How do I, as a supplier, help you have that follow-on conversation? What do I do to help you get the right conversation with your bosses?

10:22 - Kelly (Guest)
And just double checking, our scenario is a service provider correct, correct service provider as procurement. You are my supplier. I consider you the expert on not just the service that I am buying from your company but also the business outcomes that service can help our company drive internally, externally, whatever it might be and in fact, if I don't know what the outcomes are for your business, I shouldn't really be supplying to you at a strategic level and you sure as heck can't help me have that conversation.

10:51
Exactly right. But what you can teach me is what I don't know about how other companies are better managing or leveraging the service that you sell to get more out of the same. So this is where we've already figured out savings. We've already, hopefully, come to an agreement on terms. But you might be able to say to me have you ever thought about or did you know that, or have you ever considered?

11:18
Now, knowing who's joining us today, this can actually open the door not just to procurement having the conversation they want, but for a bigger SOW invoice for you down the road, exactly Because you might be able to say to me did you realize adjacent service is better, more efficiently delivered if you combine it with this? That is where procurement gets to have the conversation around. Hey, are we open to rethinking the way that we meet this need or buy this service? And you get to have the conversation about look, I've grown our footprint with this customer simply by partnering with my point of contact at the company. I would say in a service context, that is definitely one of the ways. Help us be better consumers of what you know you provide well.

12:06 - Mike (Host)
So, for example, if I would say to you, having done this deal, Kelly, just before we move on, what we find in the current environment across a whole number of clients like you in the same sector because we work across clients in sector there are a couple of big things happening, the problem you're trying to solve and that we're helping you solve to deliver this outcome. We've seen instances of doubling the size of the outcome by changing the approach we take. Is that something that's of interest now, or should we just stick to the scope we've got, or is it something you want to discuss?

12:45 - Kelly (Guest)
I think the challenge around that because it is a good conversation to have the challenge is when, exactly, if you're not an incumbent supplier and you bring that up too soon in the whole process, my thought is going to be this is a trap.

13:01 - Mike (Host)
Risk. It's a trap. We're walking into a trap. They're trying to trick me. I knew this was going to happen Exactly I knew this was going to happen, Exactly I knew this was going to happen.

13:07 - Kelly (Guest)
At the same time, if you hold it too late now, the opportunity is gone, exactly. So what I would almost recommend is something of a toe dip as early as you can on the process, as you're getting to have conversations. Hey, at some point in this process are we going to get to have a more open-ended conversation? Because when that time comes, I have some questions. Not I want to tell you how to do your job better, I want to improve how you buy the service. I have some questions about how this service fits into your business, your value proposition, whatever it is.

13:41
But I don't want to speak out of turn. I want to respect your process. Come right out and just signal support for the process. A good procurement person I know we've talked to there's some like legacy folks. There's people that are more value-minded, a very value-oriented, commercially-minded procurement professional. Even if they can't have that conversation in the moment, it's going to go red flag note for later. Find the appropriate time to have this conversation in the right context. So it's not cheating, it's not giving undue opportunity to one provider, but you should want to know what that information is.

14:16 - Mike (Host)
Brilliant. So the problem is here. We could carry on for hours on just this one topic. Let me change tack for a second. I think we've now answered why do procurement behave the way they do and what motivates them. The next one is how can, why should and when should suppliers build ethical relationships with procurement? And what I'm trying to get to here is again it's not a trick question is there are times when procurement are open to a discussion with suppliers about the broader topics and there's times when they, bluntly, aren't. If you're in a process, it's quite hard. So how can, why should and when should suppliers build ethical relationships with procurement? In advance of an RFP, we'll say yeah.

15:02 - Kelly (Guest)
So, in advance of an RFP, if you are a current supplier, under contract early and often right. That dialogue should be happening absolutely all the time. If you are a prospective supplier and you're trying to sort of break in regular outreach, right. If you can offer something that sounds like an audit, if you can offer something that says something that sounds like an audit, if you can offer something that says listen, we found that X percent of the companies that we work with can double their impact by changing this one thing, like your last example. Yeah, put it out there, see if they're receptive. You will need to follow up. I'm very sorry You're going to need to keep following up, but don't necessarily get pushier and more heavy handed as you go. Simply make yourself available.

15:48
Now I talked about the fact that I can't bake the other thing personally. That people might not know about me, but that I think is relevant to this conversation. I was raised by an enterprise sales guy and so in the back of my head I can hear dad's voice and I know the salesperson's mindset. So if something is driving you, whether it's specific sales incentives, whether it's the timing of your quarter close, just be open about those things. Procurement knows they drive your motivations. Not being pushy, not being heavy handed, but putting that information out there. Because again, it might feel like, well, I'm revealing a lot if I say that my quarter close is coming up and I've got numbers I'm trying to hit. But again, if this is going to be mutually beneficial, procurement should hear opportunity. This person has an incentive to be flexible, to be creative. I should be willing to hear you out, even if it's for a relatively small piece of the business on a test or pilot basis.

16:47 - Mike (Host)
Brilliant. So if you're not an incumbent supplier and you're trying to break in, engage your procurement proactively Running webinars. Breakfast invite to breakfast. We don't get out much, so it's a good thing to invite us.

17:01 - Kelly (Guest)
Although with stuff like breakfast you do have to be careful. Most large companies have very straightforward ethics policies they do, and so certainly, depending on the company, even charity golf can start to cross lines. It can, I would think. Group benefit, you know it again, checking right Not to the individual person that is the decision maker or the procurement professional that owns the category, but some sort of collective benefit that hopefully doesn't have a dollar value that can be assigned to it, because that's when you start coming under those corporate ethics policies, exactly right.

17:32 - Mike (Host)
And so, for example, inviting a procurement professional. If I invited Kelly to a one-on-one breakfast at the Ritz, with a lavish slap-up breakfast and champagne, that would be a disaster.

17:46 - Kelly (Guest)
Now you're making it really hard. This feels like entrapment, Mike.

17:50 - Mike (Host)
However, if I invite you to a breakfast with 12 other procurement professionals, with croissants and a piece of toast and a cup of tea, that would be fine.

17:59 - Kelly (Guest)
And I'm presumably there to network with my peers just as much as I am to talk to you. Absolutely Public place, lots of other people. Yeah, can we still have the champagne though?

18:09 - Mike (Host)
No, I'm afraid not. Sparkling wine possibly, but maybe not champagne. So how are we going? For time? We're doing pretty well, actually, so I'm going to add an extra question which again, we didn't talk about before. I talk to agencies, consultancies, tech companies about the importance of understanding what category management means and how category management which sourcing professionals run, brackets, procurement people to make it easy for the audience, why is it important for a supplier to get on the agenda of someone who's writing a category plan and updating their category plan? First of all, what is it? Secondly, why is it important?

18:48 - Kelly (Guest)
So the way I always think about category management is it's sort of the next level up from a sourcing project. So if your sourcing project is for a very specific type of service or item or product, category management goes to the next level and it's a little bit broader umbrella. So, for instance, even the example we used earlier where we talked about adjacent services or related offerings if you're starting to roll things like that together, you're now working your way towards a category level. Now the challenge of this and this might be a secret- a lot of procurement professionals don't have any idea what a category strategy is Right.

19:29
It's one of those things like transformation Everybody goes, oh, that's wonderful, we're going to have a transformation.

19:34 - Mike (Host)
It's important.

19:36 - Kelly (Guest)
And everybody goes back to their just say what the heck does that mean? What am I supposed to do now Exactly? Figuring out if the person that you're talking to legitimately has a category plan? Not that you want to ask them, that's very rude and you're going to turn procurement off. But if you start asking questions like okay, this is the service we're here to talk about, can you tell me what other services or products connect in your overall category strategy?

20:02 - Mike (Host)
What else do you buy like this Exactly.

20:05 - Kelly (Guest)
Because maybe I can propose something that's a little bit more integrated, that aligns with the scope of your category strategy. If you get sort of a blank look, don't worry about what a category strategy is. That company is not using one, or at least that buyer isn't Exactly. But if you get, oh it's interesting, you should ask me that and you start getting more information. Now you know you can have the conversation and build the relationship and maybe the contract on that level.

20:33 - Mike (Host)
Brilliant.

20:34 - Kelly (Guest)
I think that's probably the best explanation I've had of how category management works and when to spot the sign of Including the part where most people don't know what it is Exactly right.

20:38 - Mike (Host)
So at that point we'll move on. So the kind of the final, kind of bigger topic, and then I want to close at the end with something around some practical tips for service providers. So last big topic what makes a winning supply proposal and pitch for high value strategic services, eg consultancy, marketing services, etc. So what makes a winning supply proposal for high value strategic services in your view, in the community that you operate within, procurement?

21:08 - Kelly (Guest)
So I'll say two things Be specific, right. A lot of times these very strategic services are a little bit amorphous. Be as specific as you can about milestones, deliverables, outcomes. Have case studies that speak to those, if you can. That's the one category of thing to do. The other one is simply be honest with yourself about whether there is a good cultural fit between the two organizations.

21:34
If, from the outset, there's friction, there's misunderstanding, you just don't seem to click very mature decision on the part of a company rep, you need to swap out project leaders because there's a better cultural fit. That could be, in fact, what gets the deal at the end of the day. But a lot of times both procurement and the business who are ultimately the decision maker in these cases, especially for strategic service deals, they are making decisions based on sort of vibe. I know, as unspecific as that is, as I'm asking for specifics, but if you can feel it's not there, do whatever you can to create it. Those are my two pieces of advice. So be specific and make sure there is an obvious and good cultural fit between the team selling and the team deciding to buy.

22:20 - Mike (Host)
So let's just dig into it a little bit more. So let's take an example, a scenario. So let's say it's IT services. So you, as a procurement lead, have got a requirement to solve an IT infrastructure problem and you know from the market intelligence that you've picked up it's worth a million dollars a year to a service provider and you've run an RFP. You run the RFI. First. You went from seven down to say five, and then from five suppliers you're now down at first. You went from seven down to say five, and then from five suppliers you're now down at three, having received their proposals. So we're now at the stage of you've got the proposals, you've shortlisted three. Now something's going to happen.

22:57
Before you select one, let's say the next stage is a presentation. There's a meeting with a bunch of stakeholders. The supplier's got an hour and a half. They've each got an hour and a presentation. There's a meeting with a bunch of stakeholders. The supplier's got an hour and a half. They've each got an hour and a half. You can see where I'm going with this. So you're on the panel. You've got your other stakeholders on the panel as well. Three suppliers are presenting. Let's say it's all on one day. It never is, but let's say it's all on one day, which would be a hell of a day. What makes the winning supplier stand out on those three that you've seen? They've all pre-qualified, they're in the room, they've all written good quality proposals. In your professional view, across all the ones you've seen, the people you've talked to, what do you think makes the stakeholder group, the panel, go? It's X.

23:48 - Kelly (Guest)
I think it is a provider that understands the buying company's desired business outcomes and is able to explain how they will hold themselves accountable and self-police. Because what we also know is that all of those proposals are going to end up being wrong. They are. What we need is going to change. What has been bid is going to change. What I want to know is if I sign with you, am I going to have to worry that you're doing the right thing, that you're sticking to what we agreed to? Or can you say to me at that proposal meeting look, we know things are going to happen.

24:24
So here is the system we have in place. Maybe it's a reporting cadence, maybe it's driving monthly business meetings, maybe it's you provide me with some report. That makes me look like a hero internally, because not only do I have specific information about outcomes, I can say, oh, and guess who created this? The provider, because they know that we are a discerning company and that we expect a lot from our business partners. If you can explain how you're going to keep the bus on the road, that is going to make you stand out, because everybody knows things are going to change, and the more you can acknowledge that upfront. Certainly it doesn't have to sound like, oh, we have no project management abilities whatsoever. But listen, this is how we continue to adjust, this is how we will keep you informed, this is how we will hold ourselves accountable and deliver that information to you. That is starting to sound like a very winning, differentiated message.

25:18 - Mike (Host)
Brilliant. What about risk, kelly? So talk to me about in that session. How do you start to knock people out based upon your kind of concerns around risk? What signs are you looking for where you go? There's going to be a problem here, I can tell.

25:38 - Kelly (Guest)
I think it's honesty and this is where, as cold as we may seem, effective procurement professionals have to be very good judges of character. If we ask a question about risk that is realistic say maybe with current customers of the service provider and we start to get like the dance, you can tell they're being nervous, they're trying to hold back and nervous to try and hold back. Okay, now we know there's a concern around risk that you don't want to talk about with us. I would much rather come out and have somebody say these are currently the top risks that we're helping our other customers manage. Risk is real. This is how we're helping them. This is what they're finding works. This is something someone tried that didn't work.

26:18
But here's why we think, why I would be open, I would be transparent, I would be honest about it, because that signals that you're someone who is well living in reality, but also that you're willing to dig in and help solve the problem, that it's not going to be like well, whoa, whoa, whoa. All that risk came from your side. You're on your own to fix this. We want to know are we in this together to consume and provide the service and to resolve the issues that come up along the way, or are we going to be left holding the bag by ourselves when something inevitably goes wrong? So I would just be upbeat be calm about it, but be frank and transparent when it comes to discussing risk.

26:56 - Mike (Host)
Definitely and in fact, when I've been in that situation in that procurement seat, Definitely and in fact, when I've been in that situation in that procurement seat, suppliers that have put up like a risk register and talked me through it as a group, doing exactly what you've just said. In our experience, these kind of programs, there are these kind of risks. There's some operational, there's some brand, there's some financial. Let's talk through those risks, let's talk through what's gone wrong, let's talk through the signs about when do we know these risks are starting to materialize and what we've done about it. And being honest, we don't always get it right, but we have got governance in place that makes sure that it won't get out of control before we get our arms around it.

27:37 - Kelly (Guest)
Yeah, and sometimes it is a supplier relationship where something goes wrong out of the gate and it's fixed well, it ends up being the strongest supplier relationships, the longest term contracts, when you look at them big picture.

27:51 - Mike (Host)
Exactly as a marketing professor said to me one day, many, many years ago it's not the problem, that's the problem, it's the fact that you've fixed it. You've spotted it, you've fixed it and then come to me and said there was a problem, we have fixed it and it won't happen again, because now we've done this Exactly, kelly. Last three tips. So imagine you're talking to a mid-sized organization. A hundred people could be services, it services, could be marketing, could be consulting, and they were, could be marketing, could be consulting, and they were just saying to you Kelly, what advice would you give us as we grow our business and we're working with more enterprise customers about engaging with procurement? What are the three big things that you'd say?

28:35 - Kelly (Guest)
Be professional. I know that sounds crazy, but the world has been through a lot. People are working from home. They've got jammy bottoms on with a button-down shirt. Listen when it's time to put your game face on for sales. Be professional.

28:51
Full sentences in your emails, no typos in your emails. Be polite, be courteous, be friendly. That's the first thing. The second thing I would say is be prepared and informed. So know what it is that you want to say in whatever kind of meeting or interaction you're going to have, but practice it. It's actually something I learned early in my career.

29:14
I was in a research team at a boutique consulting firm here in Boston. You would regularly see even partners at that firm by themselves in meeting rooms practicing delivering. It is absolutely worth doing that. And the last thing that I will say be nice. People really do buy from other people that they want to buy from. If you're prepared and informed, if you are professional and if you are nice to the procurement professional, an EA, somebody at the reception desk. Be nice to every single person you encounter. You'd be amazed at how rarely all three of those things come through consistently through the entire process and people take note. Decision makers, procurement will take note. So not necessarily procurement specific things, but it is amazing where we find ourselves in business today Things like that. Your whole team can really make a difference on how the specific proposal is received and perceived.

30:15 - Mike (Host)
Kelly, it's been amazing. Thank you ever so much for joining me on Higgle, the B2B Sales Club podcast. Where can people find out more about you?

30:23 - Kelly (Guest)
I would say the best place is LinkedIn, kelly Barner. You can also check out Art of Procurement, art of Supply, if you want a sort of a more supply chain oriented perspective. But, mike, it was my pleasure to be here and I'm grateful for everybody that joined us for the conversation.

30:37 - Mike (Host)
Thanks, Kelly. Look forward to talking to you again soon. Conversation. Thanks, Kelly, Look forward to talking to you again soon. Thanks for listening to Higgle the B2B Sales Club podcast series with your host, Mike Lander. Please subscribe so that you'll catch all the next episodes.